Exhibit 10.2


 


IRONWOOD PHARMACEUTICALS, INC.


 


AMENDED AND
RESTATED 2002 STOCK INCENTIVE PLAN


 


1.                                       Purpose


 


The purpose of this Amended and Restated 2002 Stock Incentive Plan (the
“Plan”) of Ironwood Pharmaceuticals, Inc., a Delaware  corporation
(the “Company”), is to advance the interests of the Company’s stockholders by
enhancing the Company’s ability to attract, retain and motivate persons who
make (or are expected to make) important contributions to the Company by
providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company’s stockholders.  Except where the context otherwise requires,
the term “Company” shall include any of the Company’s present or future parent
or subsidiary corporations as defined in Sections 424(e) or (f) of
the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the “Code”) and any other business venture (including, without
limitation, joint venture or limited liability company) in which the Company
has a controlling interest, as determined by the Board of Directors of the
Company (the “Board”).


 


2.                                       Eligibility


 


All of the Company’s employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock awards, or other
stock-based awards (each, an “Award”) under the Plan.  Each person who has been granted an Award
under the Plan shall be deemed a “Participant”.


 


3.                                       Administration and Delegation


 


(a)                                  Administration by Board of Directors. 
The Plan will be administered by the Board.  The Board shall have authority to grant
Awards and to adopt, amend and repeal such administrative rules, guidelines and
practices relating to the Plan as it shall deem advisable.  The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency.  All decisions by the Board shall be made in
the Board’s sole discretion and shall be final and binding on all persons
having or claiming any interest in the Plan or in any Award.  No director or person acting pursuant to the
authority delegated by the Board shall be liable for any action or
determination relating to or under the Plan made in good faith.


 


(b)                                 Appointment of Committees. 
To the extent permitted by applicable law, the Board may delegate any or
all of its powers under the Plan to one or more committees or subcommittees of
the Board (a “Committee”).  All
references in the Plan to the “Board” shall mean the Board or a Committee of
the Board or to the executive officers referred to in Section


 

















 


3(c) to
the extent that the Board’s powers or authority under the Plan have been
delegated to such Committee or executive officers.


 


(c)                                  Delegation to Executive Officers. 
To the extent permitted by applicable law, the Board may delegate to one
or more executive officers of the Company the power to grant Awards to
employees or officers of the Company or any of its present or future subsidiary
corporations and to exercise such other powers under the Plan as the Board may
determine, provided that the Board shall fix the terms of the Awards to be
granted by such executive officers (including the exercise price of such
Awards, which may include a formula by which the exercise price will be
determined) and the maximum number of shares subject to Awards that the
executive officers may grant; provided further, however, that no executive
officer shall be authorized to grant Awards to any “executive officer” of the
Company (as defined by Rule 3b-7 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined
by Rule 16a-1 under the Exchange Act).


 


4.                                       Stock Available for Awards. 
Subject to adjustment under Section 8, Awards may be made under the
Plan for (i) up to 4,700,000 shares of common stock, $.001 par value per
share, of the Company (the “Common Stock”) and (ii) such additional shares
of Common Stock as are reserved for issuance under the Company’s Amended and
Restated 1998 Stock Option Plan that are not subject to or represented by
outstanding stock options or other stock awards, including shares underlying
stock options or other stock awards that have been, or in the future are,
repurchased or canceled, terminated, surrendered or otherwise expire without
delivery of shares of Common Stock by the Company, subject, however, in the
case of Incentive Stock Options (as hereinafter defined), to any limitations
under the Code.  If any Award granted
under this Plan expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part (including as
the result of shares of Common Stock subject to such Award being repurchased by
the Company at the original issuance price pursuant to a contractual repurchase
right) or results in any Common Stock not being issued, the unused Common Stock
covered by such Award shall again be available for the grant of Awards under
the Plan, subject, however, in the case of Incentive Stock Options (as
hereinafter defined), to any limitations under the Code.  Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.  At no time while there is any Option (as
defined below) outstanding and held by a Participant who was a resident of the
State of California on the date of grant of such Option, shall the total number
of shares of Common Stock issuable upon exercise of all outstanding options and
the total number of shares provided for under any stock bonus or similar plan
of the Company exceed the applicable percentage as calculated in accordance
with the conditions and exclusions of Section 260.140.45 of the California
Code of Regulations, based on the shares of the Company which are outstanding
at the time the calculation is made.


 


5.                                       Stock Options


 


(a)                                  General.  The Board may
grant options to purchase Common Stock (each, an “Option”) and determine the
number of shares of Common Stock to be covered by each Option, the exercise
price of each Option and the conditions and limitations applicable to the
exercise of each Option, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.  An Option which is not intended to be an
Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory
Stock Option”.


 


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(b)                                 Incentive Stock Options. 
An Option that the Board intends to be an “incentive stock option” as
defined in Section 422 of the Code (an “Incentive Stock Option”) shall
only be granted to employees of the Company and shall be subject to and shall
be construed consistently with the requirements of Section 422 of the
Code.  The Company shall have no
liability to a Participant, or any other party, if an Option (or any part
thereof) which is intended to be an Incentive Stock Option is not an Incentive
Stock Option.


 


(c)                                  Exercise Price. 
The Board shall establish the exercise price at the time each Option is
granted and specify it in the applicable option agreement.


 


(d)                                 Duration of Options. 
Each Option shall be exercisable at such times and subject to such terms
and conditions as the Board may specify in the applicable option agreement.


 


(e)                                  Exercise of Option. 
Options may be exercised by delivery to the Company of a written notice
of exercise signed by the proper person or by any other form of notice (including
electronic notice) approved by the Board together with payment in full as
specified in Section 5(f) for the number of shares for which the
Option is exercised.


 


(f)                                    Payment Upon Exercise. 
Common Stock purchased upon the exercise of an Option granted under the
Plan shall be paid for as follows:


 


(1)                                  in cash or by check, payable to the order
of the Company;


 


(2)                                  except as the Board may, in its sole
discretion, otherwise provide in an option agreement, by (i) delivery of
an irrevocable and unconditional undertaking by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay the exercise price and
any required tax withholding or (ii) delivery by the Participant to the
Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price and any required tax withholding;


 


(3)                                  when the Common Stock is registered under
the Securities Exchange Act of 1934 (the “Exchange Act”), by delivery of shares
of Common Stock owned by the Participant valued at their fair market value as
determined by (or in a manner approved by) the Board in good faith (“Fair
Market Value”), provided (i) such method of payment is then permitted
under applicable law and (ii) such Common Stock, if acquired directly from
the Company, was owned by the Participant at least six months prior to such
delivery;


 


(4)                                  to the extent permitted by the Board, in
its sole discretion by (i) delivery of a promissory note of the Participant
to the Company on terms determined by the Board, or (ii) payment of such
other lawful consideration as the Board may determine; or


 


(5)                                  by any combination of the above permitted
forms of payment.


 


(g)                                 Substitute Options. 
In connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock of an entity,
the Board may grant Options in substitution for any options or other stock or
stock-based awards granted by such entity or an affiliate thereof.  Substitute Options may be granted on such
terms as the Board 


 


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deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.


 


6.                                       Restricted Stock


 


(a)                                  Grants.  The Board may
grant Awards entitling recipients to acquire shares of Common Stock, subject to
the right of the Company to repurchase all or part of such shares at their
issue price or other stated or formula price (or to require forfeiture of such
shares if issued at no cost) from the recipient in the event that conditions
specified by the Board in the applicable Award are not satisfied prior to the
end of the applicable restriction period or periods established by the Board
for such Award (each, a “Restricted Stock Award”).


 


(b)                                 Terms and Conditions. 
The Board shall determine the terms and conditions of any such
Restricted Stock Award, including the conditions for repurchase (or forfeiture)
and the issue price, if any.


 


(c)                                  Stock Certificates. 
Any stock certificates issued in respect of a Restricted Stock Award
shall be registered in the name of the Participant and, unless otherwise
determined by the Board, deposited by the Participant, together with a stock
power endorsed in blank, with the Company (or its designee).  At the expiration of the applicable
restriction periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or if
the Participant has died, to the beneficiary designated, in a manner determined
by the Board, by a Participant to receive amounts due or exercise rights of the
Participant in the event of the Participant’s death (the “Designated
Beneficiary”).  In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant’s estate.


 


7.                                       Other Stock-Based Awards


 


The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.


 


8.                                       Adjustments for Changes in Common Stock
and Certain Other Events


 


(a)                                  Changes in Capitalization. 
In the event of any stock split, reverse stock split, stock dividend,
recapitalization, combination of shares, reclassification of shares, spin-off
or other similar change in capitalization or event, or any distribution to
holders of Common Stock other than a normal cash dividend, (i) the number
and class of securities available under this Plan, (ii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iii) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (iv) the terms of each other outstanding Award
shall be appropriately adjusted by the Company (or substituted Awards may be
made, if applicable) to the extent the Board shall determine, in good faith,
that such an adjustment (or substitution) is necessary and appropriate.  If this Section 8(a) applies and Section 8(c) also
applies to any event, Section 8(c) shall be applicable to such event,
and this Section 8(a) shall not be applicable.


 


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(b)                                 Liquidation or Dissolution. 
In the event of a proposed liquidation or dissolution of the Company,
the Board shall upon written notice to the Participants provide that all then
unexercised Options will (i) become exercisable in full as of a specified
time at least 10 business days prior to the effective date of such liquidation
or dissolution and (ii) terminate effective upon such liquidation or
dissolution, except to the extent exercised before such effective date.  The Board may specify the effect of a
liquidation or dissolution on any Restricted Stock Award or other Award granted
under the Plan at the time of the grant of such Award.


 


(c)                                  Reorganization Events


 


(1)                                  Definition.  A “Reorganization
Event” shall mean:  (a) any merger
or consolidation of the Company with or into another entity as a result of
which all of the Common Stock of the Company is converted into or exchanged for
the right to receive cash, securities or other property or (b) any
exchange of all of the Common Stock of the Company for cash, securities or
other property pursuant to a share exchange transaction.


 


(2)                                  Consequences of a Reorganization Event on
Options.  Upon the occurrence of a Reorganization
Event, or the execution by the Company of any agreement with respect to a
Reorganization Event, the Board shall provide that all outstanding Options
shall be assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof).  For purposes hereof, an Option shall be
considered to be assumed if, following consummation of the Reorganization
Event, the Option confers the right to purchase, for each share of Common Stock
subject to the Option immediately prior to the consummation of the Reorganization
Event, the consideration (whether cash, securities or other property) received
as a result of the Reorganization Event by holders of Common Stock for each
share of Common Stock held immediately prior to the consummation of the
Reorganization Event (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Reorganization Event is not solely
common stock of the acquiring or succeeding corporation (or an affiliate
thereof), the Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received upon the exercise of
Options to consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in fair market value to the
per share consideration received by holders of outstanding shares of Common
Stock as a result of the Reorganization Event.


 


Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or substitute
for, such Options, then the Board shall, upon written notice to the
Participants, provide that all then unexercised Options will become exercisable
in full as of a specified time prior to the Reorganization Event and will
terminate immediately prior to the consummation of such Reorganization Event,
except to the extent exercised by the Participants before the consummation of
such Reorganization Event; provided, however, that in the event of a
Reorganization Event under the terms of which holders of Common Stock will
receive upon consummation thereof a cash payment for each share of Common Stock
surrendered pursuant to such Reorganization Event (the “Acquisition Price”),
then the Board may instead provide that all outstanding Options shall terminate
upon consummation of such Reorganization Event and that each Participant shall
receive, in exchange therefor, a cash payment equal to the amount (if any) by
which (A) the Acquisition Price 


 


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multiplied by the number of shares of Common Stock
subject to such outstanding Options (whether or not then exercisable), exceeds (B) the
aggregate exercise price of such Options. 
To the extent all or any portion of an Option becomes exercisable solely
as a result of the first sentence of this paragraph, upon exercise of such
Option the Participant shall receive shares subject to a right of repurchase by
the Company or its successor at the Option exercise price.  Such repurchase right (1) shall lapse at
the same rate as the Option would have become exercisable under its terms and (2) shall
not apply to any shares subject to the Option that were exercisable under its
terms without regard to the first sentence of this paragraph.


 


If any Option provides that it may be exercised for shares of Common
Stock which remain subject to a repurchase right in favor of the Company, upon
the occurrence of a Reorganization Event, any shares of restricted stock
received upon exercise of such Option shall be treated in accordance with Section 8(c)(3) as
if they were a Restricted Stock Award.


 


(3)                                  Consequences of a Reorganization Event on
Restricted Stock Awards.  Upon the occurrence of a
Reorganization Event, the repurchase and other rights of the Company under each
outstanding Restricted Stock Award shall inure to the benefit of the Company’s
successor and shall apply to the cash, securities or other property which the
Common Stock was converted into or exchanged for pursuant to such
Reorganization Event in the same manner and to the same extent as they applied
to the Common Stock subject to such Restricted Stock Award.


 


(4)                                  Consequences of a Reorganization Event on
Other Awards.  The Board shall specify the effect of a
Reorganization Event on any other Award granted under the Plan at the time of
the grant of such Award.


 


9.                                       General Provisions Applicable to Awards


 


(a)                                  Transferability of Awards. 
Except as the Board may otherwise determine or provide in an Award,
Awards shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and distribution, and,
during the life of the Participant, shall be exercisable only by the
Participant.  References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.


 


(b)                                 Documentation. 
Each Award shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. 
Each Award may contain terms and conditions in addition to those set
forth in the Plan.


 


(c)                                  Board Discretion. 
Except as otherwise provided by the Plan, each Award may be made alone
or in addition or in relation to any other Award.  The terms of each Award need not be
identical, and the Board need not treat Participants uniformly.


 


(d)                                 Termination of Status. 
The Board shall determine the effect on an Award of the disability,
death, retirement, authorized leave of absence or other  change in the employment or other status of a
Participant and the extent to which, and the period during which, the
Participant, the Participant’s legal representative, conservator, guardian or
Designated Beneficiary may exercise rights under the Award.


 


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(e)                                  Withholding. 
Each Participant shall pay to the Company, or make provision
satisfactory to the Board for payment of, any taxes required by law to be
withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. 
Except as the Board may otherwise provide in an Award, when the Common
Stock is registered under the Exchange Act, Participants may satisfy such tax
obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value; provided, however, that the total tax withholding
where stock is being used to satisfy such tax obligations cannot exceed the
Company’s minimum statutory withholding obligations (based on minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to such supplemental taxable income).  The Company may, to the extent permitted by
law, deduct any such tax obligations from any payment of any kind otherwise due
to a Participant.


 


(f)                                    Amendment of Award. 
The Board may amend, modify or terminate any outstanding Award,
including but not limited to, substituting therefor another Award of the same
or a different type, changing the date of exercise or realization, and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the Participant’s consent to such action shall be required unless the
Board determines that the action, taking into account any related action, would
not materially and adversely affect the Participant.


 


(g)                                 Conditions on Delivery of Stock. 
The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove restrictions from shares previously delivered
under the Plan until (i) all conditions of the Award have been met or
removed to the satisfaction of the Company, (ii) in the opinion of the
Company’s counsel, all other legal matters in connection with the issuance and
delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market rules and
regulations, and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may consider
appropriate to satisfy the requirements of any applicable laws, rules or
regulations.


 


(h)                                 Acceleration. 
The Board may at any time provide that any Award shall become
immediately exercisable in full or in part, free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.


 


10.                                 Miscellaneous


 


(a)                                  No Right To Employment or Other Status. 
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company.  The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan, except as expressly provided
in the applicable Award.


 


(b)                                 No Rights As Stockholder. 
Subject to the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a stockholder with respect to
any shares of Common Stock to be distributed with respect to an Award until
becoming the record holder of such shares. 
Notwithstanding the foregoing, in the event the Company effects a split
of 


 


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the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.


 


(c)                                  Effective Date and Term of Plan. 
The Plan shall become effective on the date on which it is adopted by
the Board.  No Awards shall be granted
under the Plan after the completion of ten years from the earlier of (i) the
date on which the Plan was adopted by the Board or (ii) the date the Plan
was approved by the Company’s stockholders, but Awards previously granted may
extend beyond that date.


 


(d)                                 Amendment of Plan. 
The Board may amend, suspend or terminate the Plan or any portion
thereof at any time.


 


(e)                                  Authorization of Sub-Plans. 
The Board may from time to time establish one or more sub-plans under
the Plan for purposes of satisfying applicable blue sky, securities or tax laws
of various jurisdictions.  The Board
shall establish such sub-plans by adopting supplements to this Plan containing (i) such
limitations on the Board’s discretion under the Plan as the Board deems
necessary or desirable or (ii) such additional terms and conditions not
otherwise inconsistent with the Plan as the Board shall deem necessary or desirable.  All supplements adopted by the Board shall be
deemed to be part of the Plan, but each supplement shall apply only to
Participants within the affected jurisdiction and the Company shall not be
required to provide copies of any supplement to Participants in any
jurisdiction which is not the subject of such supplement.


 


(f)                                    Governing Law. 
The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.


 


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IRONWOOD
PHARMACEUTICALS, INC.


 


2002
STOCK INCENTIVE PLAN


 


CALIFORNIA
SUPPLEMENT


 


Pursuant
to Section 10(e) of the Plan, the Board has adopted this supplement
for purposes of satisfying the requirements of Section 25102(o) of
the California Corporations Code:


 


Any
Awards granted under the Plan to a Participant who is a resident of the State
of California on the date of grant (a “California Participant”) shall be
subject to the following additional limitations, terms and conditions:


 


1.                                       Additional Limitations on Options.


 


(a)                                  Minimum Vesting Rate. 
Except in the case of Options granted to California Participants who are
officers, directors, consultants or advisors of the Company or its affiliates
(which Options may become exercisable at whatever rate is determined by the
Board), Options granted to California Participants shall become exercisable at
a rate of no less than 20% per year over five years from the date of grant; provided,
that, such Options may be subject to such reasonable forfeiture
conditions as the Board may choose to impose and which are not inconsistent
with Section 260.140.41 of the California Code of Regulations.


 


(b)                                 Minimum Exercise Price. 
The exercise price of Options granted to California Participants may not
be less than 85% of the Fair Market Value of the Common Stock on the date of
grant in the case of a Nonstatutory Stock Option or less than 100% of the Fair
Market Value of the Common Stock on the date of grant in the case of an
Incentive Stock Option; provided, however, that if the California
Participant is a person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or its parent or
subsidiary corporations, the exercise price shall be not less than 110% of the
Fair Market Value of the Common Stock on the date of grant.


 


(c)                                  Maximum Duration of Options. 
No Options granted to California Participants will be granted for a term
in excess of 10 years.


 


(d)                                 Minimum Exercise Period Following
Termination.  Unless a California Participant’s employment
is terminated for cause (as defined in any contract of employment between the
Company and such Participant, or if none, in the instrument evidencing the
grant of such Participant’s Option), in the event of termination of employment
of such Participant, he or she shall have the right to exercise an Option, to
the extent that he or she was otherwise entitled to exercise such Option on the
date employment terminated, as follows: (i) at least six months from the
date of termination, if termination was caused by such Participant’s death or “permanent
and total disability” (within the meaning of Section 22(e)(3) of the
Code) and (ii) at least 30 days from the date of termination, if
termination was caused other than by such Participant’s death or “permanent and
total disability” (within the meaning of Section 22(e)(3) of the
Code).


 


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(e)                                  Limitation on Repurchase Rights. 
If an Option granted to a California Participant gives the Company the
right to repurchase shares of Common Stock issued pursuant to the Plan upon
termination of employment of such Participant, the terms of such repurchase
right must comply with Section 260.140.41(k) of the California Code
of Regulations.


 


2.                                       Additional Limitations for Restricted Stock Awards.


 


(a)                                  Minimum Purchase Price. 
The purchase price for a Restricted Stock Award granted to a California
Participant shall be not less than 85% of the Fair Market Value of the Common
Stock at the time such Participant is granted the right to purchase shares
under the Plan or at the time the purchase is consummated; provided, however,
that if such Participant is a person who owns stock possessing more than 10% of
the total combined voting power or value of all classes of stock of the Company
or its parent or subsidiary corporations, the purchase price shall be not less
than 100% of the Fair Market Value of the Common Stock at the time such
Participant is granted the right to purchase shares under the Plan or at the
time the purchase is consummated.


 


(b)                                 Limitation of Repurchase Rights. 
If a Restricted Stock Award granted to a California Participant gives
the Company the right to repurchase shares of Common Stock issued pursuant to
the Plan upon termination of employment of such Participant, the terms of such
repurchase right must comply with Section 260.140.42(h) of the
California Code of Regulations.


 


3.                                       Additional Limitations for Other Stock-Based Awards. 
The terms of all Awards granted to a California Participant under Section 7
of the Plan shall comply, to the extent applicable, with Section 260.140.41
or Section 260.140.42 of the California Code of Regulations.


 


4.                                       Additional Limitations on Transferability of Awards. 
Except as provided in the next sentence, Awards granted to California
Participants shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and distribution, and,
during the life of such Participant, shall be exercisable only by such
Participant.  Notwithstanding the
foregoing, the Board may, in the case of Nonstatutory Stock Options, allow them
to be transferred to an inter vivos or testamentary trust in which the Options
are to be passed to beneficiaries upon the death of the trustor (settlor) or by
gift to “immediate family” as that term is defined in Rule 16a-1(e) under
the Exchange Act.


 


5.                                       Additional Requirement to Provide Information to
California Participants.  The Company shall provide to
each California Participant and to each California Participant who acquires
Common Stock pursuant to the Plan, not less frequently than annually, copies of
annual financial statements (which need not be audited).  The Company shall not be required to provide
such statements to key employees whose duties in connection with the Company
assure their access to equivalent information.


 


6.                                       Additional Limitations on Timing of Awards. 
No Award granted to a California Participant shall become exercisable,
vested or realizable, as applicable to such Award, unless 


 


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the
Plan has been approved by the Company’s stockholders within 12 months before or
after the date the Plan was adopted by the Board.


 


7.             Additional
Limitations Relating to Definition of Fair Market Value.  For purposes of Section 1(b) and 2(a) of
this supplement, “Fair Market Value” shall be determined in a manner not
inconsistent with Section 260.140.50 of the California Code of Regulation.


 


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ATTACHMENT
I


Incentive
Stock Option Agreement (Standard Vesting 1)


 


IRONWOOD PHARMACEUTICALS, INC.


 


Incentive Stock Option Agreement (Standard Vesting 1)


Granted Under
Amended and Restated 2002  Stock
Incentive Plan


 


1.                                       Grant of Option.


 


This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on                                         ,
20        (the “Grant
Date”) to
                                ,
an employee of the Company (the “Participant”), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company’s Amended and
Restated 2002 Stock Incentive Plan (the “Plan”), a total of                               
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $                    per Share, with a vesting commencement date of
                                  ,
20       (the “Vesting Commencement Date”).  Unless earlier terminated, this option shall
expire on
                                ,
20        (the “Final
Exercise Date”).


 


It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context,
the term “Participant”, as used in this option, shall be deemed to include any
person who acquires the right to exercise this option validly under its terms.


 


2.                                       Vesting Schedule.


 


(a)          This option will become exercisable (“vest”)
as to 25% of the original number of Shares on the first  anniversary
of the Vesting Commencement Date and as to an additional 2.08333% of the
original number of Shares at the end of each successive  one-month  period following the first anniversary of the Vesting
Commencement Date until the fourth anniversary of the Vesting Commencement
Date.  The shares subject to the portion
of this option that are not yet exercisable are referred to herein as “Unvested
Shares,” and the shares subject to the portion of this option that had become
exercisable are referred to herein as “Vested Shares.”


 


The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it
shall continue to be exercisable, in whole or in part, with respect to all
shares for which it is vested until the earlier of the Final Exercise Date or
the termination of this option under Section 3 hereof or the Plan,
provided, however, that unless otherwise required to avoid the forfeiture of
vested options, option exercises may be made only once per calendar year.


 


(b)                                 Early Exercise. Not withstanding the vesting schedule
set forth in paragraph (a), the Participant may elect to exercise this option
as to the Unvested Shares (in addition to the Vested Shares) if simultaneously
with such exercise the Participant enters into Stock Restriction 


 


ATTACHMENT I


 

















 


Agreement with the Company in the form attached hereto
as Exhibit A (the “Stock Restriction Agreement”). The Stock
Restriction Agreement provides that the Unvested Shares shall be subject to a
right of repurchase (the “Purchase Option”) in favor of the Company in the
event that the Participant ceases to be an employee of the Company, as that
term is defined in the Plan.


 


3.                                       Exercise of Option.


 


(a)          Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.


 


(b)         Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).


 


(c)          Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be
exercisable only to the extent that the Participant was entitled to exercise
this option on the date of such cessation. 
Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition or confidentiality provisions of
any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing  such
violation.


 


(d)         Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable
only to the extent that this option was exercisable by the Participant on the
date of his or her death or disability, and further provided that this option
shall not be exercisable after the Final Exercise Date.


 


(e)          Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement 


 


ATTACHMENT I


 

















 


between the Participant and the Company), as determined by the Company,
which determination shall be conclusive. 
The Participant shall be considered to have been discharged for “Cause”
if the Company determines, within 30 days after the Participant’s resignation,
that discharge for cause was warranted.


 


4.                                       Right of First Refusal/Right of Repurchase.


 


(a)          Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.


 


(b)         The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any
transferee to whom any such Shares shall have been sold or transferred.


 


5.                                       Agreement in Connection with Public
Offering.


 


The Participant agrees, in connection with the initial
underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act, (i) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by the Participant
(other than those shares included in the offering) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company’s securities for a period of 180 days from the
effective date of such registration statement, and (ii) to execute any
agreement reflecting clause (i) above as may be requested by the Company
or the managing underwriters at the time of such offering.


 


6.                                       Withholding.


 


No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.


 


7.                                       Nontransferability of Option.


 


This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.


 


ATTACHMENT I


 














 


8.                                       Disqualifying Disposition.


 


If the Participant disposes of Shares acquired upon
exercise of this option within two years from the Grant Date or one year after
such Shares were acquired pursuant to exercise of this option, the Participant
shall notify the Company in writing of such disposition.


 


9.                                       Provisions of the Plan.


 


This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.


 


10.                                 Participant’s Acknowledgements.


 


By acceptance of this option, the Participant agrees to the terms and
conditions hereof and acknowledges receipt of a copy of the Plan.


 


IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.


 


	
   

  	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter Hecht

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
						



 


Addendum A


 


NOTICE OF STOCK OPTION EXERCISE


 


Exhibit A


 


IRONWOOD PHARMACEUTICALS, INC.


 


Stock Restriction
Agreement


 


Exhibit A to
Stock Restriction Agreement


 


IRONWOOD PHARMACEUTICALS, INC.


Joint Escrow
Instructions


 


Exhibit B to
Stock Restriction Agreement


 


STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE


 


ATTACHMENT I


 

















 


ATTACHMENT
II


Incentive
Stock Option Agreement (Standard Vesting 2)


 


IRONWOOD PHARMACEUTICALS, INC.


 


Incentive Stock Option Agreement (Standard Vesting 2)


Granted Under
Amended and Restated 2002  Stock
Incentive Plan


 


1.                                       Grant of Option.


 


This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on                                         ,
20          (the
“Grant Date”) to
                                ,
an employee of the Company (the “Participant”), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company’s Amended and
Restated 2002 Stock Incentive Plan (the “Plan”), a total of                               
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $                    per Share, with a vesting commencement date of
                                  ,
20       (the “Vesting Commencement Date”).  Unless earlier terminated, this option shall
expire on
                                ,
20        (the “Final
Exercise Date”).


 


It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context,
the term “Participant”, as used in this option, shall be deemed to include any
person who acquires the right to exercise this option validly under its terms.


 


2.                                       Vesting Schedule.


 


(a)          This option will become exercisable (“vest”)
as to 1.25% of the original number of
Shares on each monthly anniversary of the Vesting Commencement Date for the
first 36 months, and as to 4.5833% of the original number of Shares as of each
subsequent monthly anniversary of the Vesting Commencement Date until fully
vested. The shares subject to the portion of this option that are not
yet exercisable are referred to herein as “Unvested Shares,” and the shares
subject to the portion of this option that had become exercisable are referred
to herein as “Vested Shares.”


 


The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it
shall continue to be exercisable, in whole or in part, with respect to all
shares for which it is vested until the earlier of the Final Exercise Date or
the termination of this option under Section 3 hereof or the Plan,
provided, however, that unless otherwise required to avoid the forfeiture of
vested options, option exercises may be made only once per calendar year.


 


(b)                                 Early Exercise. Not withstanding the vesting schedule
set forth in paragraph (a), the Participant may elect to exercise this option
as to the Unvested Shares (in addition to the Vested Shares) if simultaneously
with such exercise the Participant enters into Stock Restriction 


 


ATTACHMENT II


 

















 


Agreement with the Company in the form attached hereto
as Exhibit A (the “Stock Restriction Agreement”). The Stock
Restriction Agreement provides that the Unvested Shares shall be subject to a
right of repurchase (the “Purchase Option”) in favor of the Company in the
event that the Participant ceases to be an employee of the Company, as that
term is defined in the Plan.


 


3.                                       Exercise of Option.


 


(a)          Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.


 


(b)         Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).


 


(c)          Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be
exercisable only to the extent that the Participant was entitled to exercise
this option on the date of such cessation. 
Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition or confidentiality provisions of
any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing  such violation.


 


(d)         Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable
only to the extent that this option was exercisable by the Participant on the
date of his or her death or disability, and further provided that this option
shall not be exercisable after the Final Exercise Date.


 


(e)          Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement 


 


ATTACHMENT II


 

















 


between the Participant and the Company), as determined by the Company,
which determination shall be conclusive. 
The Participant shall be considered to have been discharged for “Cause”
if the Company determines, within 30 days after the Participant’s resignation,
that discharge for cause was warranted.


 


4.                                       Right of First Refusal/Right of Repurchase.


 


(a)          Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.


 


(b)         The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any
transferee to whom any such Shares shall have been sold or transferred.


 


5.                                       Agreement in Connection with Public
Offering.


 


The Participant agrees, in connection with the initial
underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act, (i) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by the Participant
(other than those shares included in the offering) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company’s securities for a period of 180 days from the
effective date of such registration statement, and (ii) to execute any
agreement reflecting clause (i) above as may be requested by the Company
or the managing underwriters at the time of such offering.


 


6.                                       Withholding.


 


No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.


 


7.                                       Nontransferability of Option.


 


This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.


 


ATTACHMENT II


 

















 


8.                                       Disqualifying Disposition.


 


If the Participant disposes of Shares acquired upon
exercise of this option within two years from the Grant Date or one year after
such Shares were acquired pursuant to exercise of this option, the Participant
shall notify the Company in writing of such disposition.


 


9.                                       Provisions of the Plan.


 


This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.


 


10.                                 Participant’s Acknowledgements.


 


By acceptance of this option, the Participant agrees to the terms and
conditions hereof and acknowledges receipt of a copy of the Plan.


 


IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.


 


	
   

  	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter Hecht

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
						



 


Addendum A


 


NOTICE OF STOCK OPTION EXERCISE


 


Exhibit A


 


IRONWOOD PHARMACEUTICALS, INC.


 


Stock Restriction
Agreement


 


Exhibit A to
Stock Restriction Agreement


 


IRONWOOD PHARMACEUTICALS, INC.


Joint Escrow
Instructions


 


Exhibit B to
Stock Restriction Agreement


 


STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE


 


ATTACHMENT II


 

















 


ATTACHMENT
III


Nonstatutory
Stock Option Agreement


 


IRONWOOD PHARMACEUTICALS, INC.


 


Nonstatutory Stock Option Agreement


Granted Under
Amended and Restated 2002  Stock Incentive
Plan


 


1.                                       Grant of Option.


 


This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on                                         ,
20        (the “Grant
Date”) to
                                ,
[an employee / a consultant] of the Company (the “Participant”), of an option
to purchase, in whole or in part, on the terms provided herein and in the
Company’s Amended and Restated 2002 Stock Incentive Plan (the “Plan”), a total
of                               
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $                    per Share, with a vesting commencement date of
                                  ,
20       (the “Vesting Commencement Date”).  Unless earlier terminated, this option shall
expire on
                                ,
20        (the “Final
Exercise Date”).


 


It is intended that the option evidenced by this agreement shall not be
an incentive stock option as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, and any regulations promulgated thereunder
(the “Code”).  Except as otherwise
indicated by the context, the term “Participant”, as used in this option, shall
be deemed to include any person who acquires the right to exercise this option
validly under its terms.


 


2.                                       Vesting Schedule.


 


(a)          This option will become exercisable (“vest”)
as
                                                  .  The shares subject to the portion of this
option that are not yet exercisable are referred to herein as “Unvested Shares,”
and the shares subject to the portion of this option that had become
exercisable are referred to herein as “Vested Shares.”


 


The right of exercise shall be cumulative so that to the extent the option
is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan, provided,
however, that unless otherwise required to avoid the forfeiture of vested
options, option exercises may be made only once per calendar year.


 


(b)                                 Early Exercise. Not withstanding the vesting schedule
set forth in paragraph (a), the Participant may elect to exercise this option
as to the Unvested Shares (in addition to the Vested Shares) if simultaneously
with such exercise the Participant enters into Stock Restriction Agreement with
the Company in the form attached hereto as Exhibit A (the “Stock
Restriction Agreement”). The Stock Restriction Agreement provides that the
Unvested Shares shall be subject to a right of repurchase (the “Purchase Option”)
in favor of the Company in the event 


 


ATTACHMENT III


 

















 


that the Participant ceases to be [an employee / a
consultant] of the Company, as that term is defined in the Plan.


 


3.                                       Exercise of Option.


 


(a)          Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.


 


(b)         Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).


 


(c)          Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be
exercisable only to the extent that the Participant was entitled to exercise
this option on the date of such cessation. 
Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition or confidentiality provisions of
any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing  such
violation.


 


(d)         Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable
only to the extent that this option was exercisable by the Participant on the
date of his or her death or disability, and further provided that this option
shall not be exercisable after the Final Exercise Date.


 


(e)          Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the Participant
and the Company), as determined by the Company, which determination shall be
conclusive.  The Participant shall be
considered to have been discharged for “Cause” if 


 


ATTACHMENT III


 

















 


the Company determines, within 30 days after the Participant’s
resignation, that discharge for cause was warranted.


 


4.                                       Right of First Refusal/Right of Repurchase.


 


(a)          Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.


 


(b)         The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any transferee
to whom any such Shares shall have been sold or transferred.


 


5.                                       Agreement in Connection with Public
Offering.


 


The Participant agrees, in connection with the initial
underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act, (i) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by the Participant
(other than those shares included in the offering) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company’s securities for a period of 180 days from the
effective date of such registration statement, and (ii) to execute any
agreement reflecting clause (i) above as may be requested by the Company
or the managing underwriters at the time of such offering.


 


6.                                       Withholding.


 


No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.


 


7.                                       Nontransferability of Option.


 


This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the Participant.


 


ATTACHMENT III


 

















 


8.                                       Provisions of the Plan.


 


This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.


 


9.                                       Participant’s Acknowledgements.


 


By
acceptance of this option, the Participant agrees to the terms and conditions
hereof and acknowledges receipt of a copy of the Plan.


 


IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.


 


	
   

  	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter Hecht

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
						



 


ATTACHMENT III


 

















 


Addendum A


 


NOTICE OF STOCK OPTION EXERCISE


 


Date:                      


 


Ironwood Pharmaceuticals, Inc.


320 Bent Street


Cambridge, MA  02141


 


Attention:  Secretary


 


Dear Sir or Madam:


 


I am
the holder of a                   Stock
Option granted to me under the Ironwood Pharmaceuticals, Inc. (the “Company”)
Amended and Restated 2002 Stock Incentive Plan on
                    
for the purchase of
                    
shares of Series B Common Stock of the Company at a purchase price of
$                    
per share.


 


I
hereby exercise my option to purchase
                  
shares of Series B Common Stock (the “Shares”), for which I have enclosed
                    
in the amount of
                .  Please register my stock certificate as
follows:


 


	
  Name(s):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tax I.D. #:

  	
   

  	
   

  



 


I
represent, warrant and covenant as follows:


 


1.                                       I am purchasing the Shares for my own account for
investment only, and not with a view to, or for sale in connection with, any
distribution of the Shares in violation of the Securities Act of 1933 (the “Securities
Act”), or any rule or regulation under the Securities Act.


 


2.                                       I have had such opportunity as I have deemed adequate
to obtain from representatives of the Company such information as is necessary
to permit me to evaluate the merits and risks of my investment in the Company.


 


3.                                       I have sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the
purchase of the Shares and to make an informed investment decision with respect
to such purchase.


 


ATTACHMENT III


 





















 


4.                                       I can afford a complete loss of the value of the
Shares and am able to bear the economic risk of holding such Shares for an
indefinite period.


 


5.                                       I understand that (i) the Shares have not been
registered under the Securities Act and are “restricted securities” within the
meaning of Rule 144 under the Securities Act, (ii) the Shares cannot
be sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration is then
available; (iii) in any event, the exemption from registration under Rule 144
will not be available for at least six months and even then will not be
available unless a public market then exists for the applicable series of
Common Stock of the Company, adequate information concerning the Company is then
available to the public, and other terms and conditions of Rule 144 are
complied with; and (iv) there is now no registration statement on file
with the Securities and Exchange Commission with respect to any stock of the
Company and the Company has no obligation or current intention to register the
Shares under the Securities Act.


 


	
  Very truly yours,

  
	
   

  
	
   

  
	
   

  	
   

  
	
  (Signature)

  



 


ATTACHMENT III


 

















 


Exhibit A


 


IRONWOOD PHARMACEUTICALS, INC.


 


Stock Restriction
Agreement


 


AGREEMENT
made this
             day of
                          ,
20      , between Ironwood Pharmaceuticals, Inc.,
a Delaware  corporation (the “Company”), and
                                                
(the “Participant”).


 


For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:


 


1.                                       Purchase of Shares.


 


The
Company shall issue and sell to the Participant, and the Participant shall
purchase from the Company, subject to the terms and conditions set forth in
this Agreement and the Company’s Amended and Restated 2002 Stock Incentive Plan
(the “Plan”),
                  
shares (the “Shares”) of Series B Common Stock, $.001 par value, of the
Company (“Series B Common Stock”), at a purchase price of
$         per share.  The aggregate purchase price for the Shares
shall be paid by the Participant by check payable to the order of the Company
or such other method as may be acceptable to the Company.  Upon receipt by the Company of payment for
the Shares, the Company shall issue to the Participant one or more certificates
in the name of the Participant for that number of Shares purchased by the
Participant.  The Participant agrees that
the Shares shall be subject to the purchase options set forth in
Sections 2 and 5 of this Agreement and the restrictions on transfer set
forth in Section 4 of this Agreement.


 


2.                                       Purchase Option.


 


(a)          In the event that the Participant ceases
to be employed by the Company for any reason or no reason, with or without
cause, prior to
                            ,
20      , the Company shall have the right and
option (the “Purchase Option”) to purchase from the Participant, for a sum of
$         per share (the “Option Price”),
some or all of the Unvested Shares (as defined below).


 


“Unvested
Shares” means the total number of Shares multiplied by the Applicable
Percentage at the time the Purchase Option becomes exercisable by the
Company.  The “Applicable Percentage”
shall be
                                                    ,


 


For
purposes of this Agreement, employment with the Company shall include
employment with a parent or subsidiary of the Company.


 


3.                                       Exercise of Purchase Option and Closing.


 


(a)          The Company may exercise the Purchase
Option by delivering or mailing to the Participant (or his estate), within 60
days after the termination of the employment of the 


 


ATTACHMENT III


 

















 


Participant with the Company, a written notice of
exercise of the Purchase Option.  Such
notice shall specify the number of Shares to be purchased.  If and to the extent the Purchase Option is
not so exercised by the giving of such a notice within such 60-day period, the
Purchase Option shall automatically expire and terminate effective upon the
expiration of such 60-day period.


 


(b)         Within 10 days after delivery to the
Participant of the Company’s notice of the exercise of the Purchase Option
pursuant to subsection (a) above, the Participant (or his estate)
shall, pursuant to the provisions of the Joint Escrow Instructions referred to
in Section 7 below, tender to the Company at its principal offices the
certificate or certificates representing the Shares which the Company has
elected to purchase in accordance with the terms of this Agreement, duly
endorsed in blank or with duly endorsed stock powers attached thereto, all in
form suitable for the transfer of such Shares to the Company.  Promptly following its receipt of such
certificate or certificates, the Company shall pay to the Participant the
aggregate Option Price for such Shares (provided that any delay in making such
payment shall not invalidate the Company’s exercise of the Purchase Option with
respect to such Shares).


 


(c)          After the time at which any Shares are
required to be delivered to the Company for transfer to the Company pursuant to
subsection (b) above, the Company shall not pay any dividend to the
Participant on account of such Shares or permit the Participant to exercise any
of the privileges or rights of a stockholder with respect to such Shares, but
shall, in so far as permitted by law, treat the Company as the owner of such
Shares.


 


(d)         The Option Price may be payable, at the
option of the Company, in cancellation of all or a portion of any outstanding
indebtedness of the Participant to the Company or in cash (by check) or both.


 


(e)          The Company shall not purchase any
fraction of a Share upon exercise of the Purchase Option, and any fraction of a
Share resulting from a computation made pursuant to Section 2 of this
Agreement shall be rounded to the nearest whole Share (with any one-half Share
being rounded upward).


 


(f)            The Company may assign its Purchase
Option to one or more persons or entities.


 


4.                                       Restrictions on Transfer.


 


(a)          The Participant shall not sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively “transfer”) any Shares, or any interest therein, that
are subject to the Purchase Option, except that the Participant may transfer
such Shares (i) to or for the benefit of any spouse, children, parents,
uncles, aunts, siblings, grandchildren and any other relatives approved by the
Board of Directors (collectively, “Approved Relatives”) or to a trust
established solely for the benefit of the Participant and/or Approved
Relatives, provided that such Shares shall remain subject to this
Agreement (including without limitation the restrictions on transfer set forth
in this Section 4, the Purchase Option and the right of first refusal set
forth in Section 5) and such permitted transferee shall, as a condition to
such transfer, deliver to the Company a written instrument confirming that such
transferee shall be bound by all of the terms and conditions of this Agreement
or (ii) as part of the sale of all or substantially all of the shares of
capital stock of the Company (including pursuant to a 


 


ATTACHMENT III


 

















 


merger or consolidation), provided that, in accordance with the
Plan, the securities or other property received by the Participant in
connection with such transaction shall remain subject to this Agreement.


 


(b)         The Participant shall not transfer any
Shares, or any interest therein, that are no longer subject to the Purchase
Option, except in accordance with Section 5 below.


 


5.                                       Right of First Refusal.


 


(a)          Any shares that
are purchased pursuant to this Agreement are subject to any right of first
refusal that may be described in the Company’s by-laws in effect at such time
as the Company elects to exercise its right. 
The Company’s right of first refusal shall expire on the date of the
closing of the first registration of a public offering of equity securities
under Section 12 of the Exchange Act of 1934, as amended.  In addition, to the extent provided in the
Company’s by-laws as amended from time to time, the Company shall have the
right to repurchase all or any part of the shares purchased pursuant to this
agreement.


 


6.                                       Effect of Prohibited Transfer.


 


The
Company shall not be required (a) to transfer on its books any of the
Shares which have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (b) to treat as owner of such
Shares or to pay dividends to any transferee to whom any such Shares shall have
been sold or transferred.


 


7.                                       Agreement in Connection with Public Offering.


 


The
Participant agrees, in connection with the initial underwritten public offering
of the Company’s securities pursuant to a registration statement under the
Securities Act, (i) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
of the Company held by the Participant (other than those shares included in the
offering) without the prior written consent of the Company or the underwriters
managing such initial underwritten public offering of the Company’s securities
for a period of 180 days from the effective date of such registration statement,
and (ii) to execute any agreement reflecting clause (i) above as may
be requested by the Company or the managing underwriters at the time of such
offering.


 


8.                                       Escrow.


 


The
Participant shall, upon the execution of this Agreement, execute Joint Escrow
Instructions in the form attached to this Agreement as Exhibit A.  The Joint Escrow Instructions shall be
delivered to the Secretary of the Company, as escrow agent thereunder.  The Participant shall deliver to such escrow
agent a stock assignment duly endorsed in blank, in the form attached to this
Agreement as Exhibit B, and hereby instructs the Company to deliver
to such escrow agent, on behalf of the Participant, the certificate(s) evidencing
the Shares issued hereunder.  Such
materials shall be held by such escrow agent pursuant to the terms of such
Joint Escrow Instructions.


 


ATTACHMENT III


 














 


9.                                       Restrictive Legends.


 


All
certificates representing Shares shall have affixed thereto legends in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:


 


“The shares of stock
represented by this certificate are subject to restrictions on transfer and an
option to purchase set forth in a certain Stock Restriction Agreement between
the corporation and the registered owner of these shares (or his predecessor in
interest), and such Agreement is available for inspection without charge at the
office of the Secretary of the corporation.”


 


“The shares represented
by this certificate have not been registered under the Securities Act of 1933,
as amended, and may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such Act or an opinion of
counsel satisfactory to the corporation to the effect that such registration is
not required.”


 


10.                                 Adjustments for Stock Splits, Stock Dividends, etc.


 


If
from time to time during the term of the Purchase Option there is any stock
split, stock dividend, stock distribution or other reclassification of the
Common Stock of the Company, any and all new, substituted or additional
securities to which the Participant is entitled by reason of his/her ownership
of the Shares shall be immediately subject to the Purchase Option, the
restrictions on transfer and other provisions of this Agreement in the same
manner and to the same extent as the Shares, and the Option Price shall be
appropriately adjusted.


 


11.                                 Provisions of the Plan.


 


(a)          This Agreement is subject to the
provisions of the Plan, a copy of which is furnished to the Participant with
this Agreement.


 


(b)         As provided in the Plan, upon the
occurrence of a Reorganization Event (as defined in the Plan), the repurchase
and other rights of the Company hereunder shall inure to the benefit of the
Company’s successor and shall apply to the cash, securities or other property
which the Shares were converted into or exchanged for pursuant to such
Reorganization Event in the same manner and to the same extent as they applied
to the Shares under this Agreement.  If,
in connection with a Reorganization Event, a portion of the cash, securities
and/or other property received upon the conversion or exchange of the Shares is
to be placed into escrow to secure indemnification or similar obligations, the
mix between the vested and unvested portion of such cash, securities and/or
other property that is placed into escrow shall be the same as the mix between
the vested and unvested portion of such cash, securities and/or other property
that is not subject to escrow.


 


12.                                 Investment Representations.


 


The
Participant represents, warrants and covenants as follows:


 


ATTACHMENT III


 

















 


(a)          The Participant is purchasing the Shares
for his own account for investment only, and not with a view to, or for sale in
connection with, any distribution of the Shares in violation of the Securities
Act, or any rule or regulation under the Securities Act.


 


(b)         The Participant has had such opportunity
as he has deemed adequate to obtain from representatives of the Company such
information as is necessary to permit him to evaluate the merits and risks of
his investment in the Company.


 


(c)          The Participant has sufficient experience
in business, financial and investment matters to be able to evaluate the risks
involved in the purchase of the Shares and to make an informed investment
decision with respect to such purchase.


 


(d)         The Participant can afford a complete
loss of the value of the Shares and is able to bear the economic risk of
holding such Shares for an indefinite period.


 


(e)          The Participant understands that (i) the
Shares have not been registered under the Securities Act and are “restricted
securities” within the meaning of Rule 144 under the Securities Act; (ii) the
Shares cannot be sold, transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an exemption from
registration is then available; (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least six months
and even then will not be available unless a public market then exists for the
applicable series of Common Stock of the Company, adequate information
concerning the Company is then available to the public, and other terms and
conditions of Rule 144 are complied with; and (iv) there is now no
registration statement on file with the Securities and Exchange Commission with
respect to any stock of the Company and the Company has no obligation or
current intention to register the Shares under the Securities Act.


 


13.                                 Withholding Taxes; Section 83(b) Election.


 


(a)          The Participant acknowledges and agrees
that the Company has the right to deduct from payments of any kind otherwise
due to the Participant any federal, state or local taxes of any kind required
by law to be withheld with respect to the purchase of the Shares by the
Participant or the lapse of the Purchase Option.


 


(b)         The Participant has reviewed with the
Participant’s own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement.  The Participant is relying
solely on such advisors and not on any statements or representations of the
Company or any of its agents.  The
Participant understands that the Participant (and not the Company) shall be
responsible for the Participant’s own tax liability that may arise as a result
of this investment or the transactions contemplated by this Agreement.  The Participant understands that it may be
beneficial in many circumstances to elect to be taxed at the time the Shares
are purchased rather than when and as the Company’s Purchase Option expires by
filing an election under Section 83(b) of the Code with the I.R.S.
within 30 days from the date of purchase.


 


THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE
PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE
ELECTION UNDER SECTION 83(b), EVEN IF THE PARTICIPANT REQUESTS THE


 


ATTACHMENT III


 

















 


COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
THE PARTICIPANT’S BEHALF.


 


14.                                 Miscellaneous.


 


(a)          No Rights to Employment. 
The Participant acknowledges and agrees that the vesting of the Shares
pursuant to Section 2 hereof is earned only by continuing service as [an
employee / a consultant/ a director] at the will of the Company (not through
the act of being hired or purchasing shares hereunder).  The Participant further acknowledges and
agrees that the transactions contemplated hereunder and the vesting schedule
set forth herein do not constitute an express or implied promise of continued
engagement as an employee or consultant [or director] for the vesting period,
for any period, or at all.


 


(b)         Severability. 
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.


 


(c)          Waiver.  Any provision
for the benefit of the Company contained in this Agreement may be waived,
either generally or in any particular instance, by the Board of Directors of
the Company.


 


(d)         Binding Effect. 
This Agreement shall be binding upon and inure to the benefit of the
Company and the Participant and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in Sections 4 and 5 of this Agreement.


 


(e)          Notice.  All notices
required or permitted hereunder shall be in writing and deemed effectively
given upon personal delivery or five days after deposit in the United States
Post Office, by registered or certified mail, postage prepaid, addressed to the
other party hereto at the address shown beneath his or its respective signature
to this Agreement, or at such other address or addresses as either party shall
designate to the other in accordance with this Section 12(e).


 


(f)            Pronouns.  Whenever the
context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.


 


(g)         Entire Agreement. 
This Agreement and the Plan constitute the entire agreement between the
parties, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.


 


(h)         Amendment.  This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Participant.


 


(i)             Governing Law. 
This Agreement shall be construed, interpreted and enforced in
accordance with the internal laws of the State of Delaware without regard to
any applicable conflicts of laws.


 


ATTACHMENT III


 

















 


(j)             Participant’s Acknowledgments. 
The Participant acknowledges that he or she: (i) has read this
Agreement; (ii) has been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of the Participant’s own choice or
has voluntarily declined to seek such counsel; (iii) understands the terms
and consequences of this Agreement; (iv) is fully aware of the legal and
binding effect of this Agreement; and (v) understands that the law firm of
Hale and Dorr LLP, is acting as counsel to the Company in connection with the
transactions contemplated by the Agreement, and is not acting as counsel for
the Participant.


 


IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.


 


	
   

  	
  IRONWOOD PHARMACEUTICALS,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name of Participant]

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  



 


ATTACHMENT III


 

















 


Exhibit A to
Stock Restriction Agreement


 


IRONWOOD PHARMACEUTICALS, INC.


 


Joint Escrow
Instructions


 


                  ,
20      


 


Secretary


Ironwood Pharmaceuticals, Inc.


320 Bent Street


Cambridge, MA 02141


 


Dear Sir:


 


As
Escrow Agent for Ironwood Pharmaceuticals, Inc., a Delaware corporation,
and its successors in interest under the Stock Restriction Agreement (the “Agreement”)
of even date herewith, to which a copy of these Joint Escrow Instructions is
attached (the “Company”), and the undersigned person (“Holder”), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of the Agreement in accordance with the following instructions:


 


1.                                       Appointment.  Holder
irrevocably authorizes the Company to deposit with you any certificates
evidencing Shares (as defined in the Agreement) to be held by you hereunder and
any additions and substitutions to said Shares. 
For purposes of these Joint Escrow Instructions, “Shares” shall be
deemed to include any additional or substitute property.  Holder does hereby irrevocably constitute and
appoint you as his attorney-in-fact and agent for the term of this escrow to
execute with respect to such Shares all documents necessary or appropriate to
make such Shares negotiable and to complete any transaction herein
contemplated.  Subject to the provisions
of this paragraph 1 and the terms of the Agreement, Holder shall exercise
all rights and privileges of a stockholder of the Company while the Shares are
held by you.


 


2.                                       Closing of Purchase.


 


(a)          Upon any purchase by the Company of the
Shares pursuant to the Agreement, the Company shall give to Holder and you a
written notice specifying the purchase price for the Shares, as determined
pursuant to the Agreement, and the time for a closing hereunder (the “Closing”)
at the principal office of the Company. 
Holder and the Company hereby irrevocably authorize and direct you to
close the transaction contemplated by such notice in accordance with the terms
of said notice.


 


ATTACHMENT III


 

















 


(b)         At the Closing, you are directed (a) to
date the stock assignment form or forms necessary for the transfer of the
Shares, (b) to fill in on such form or forms the number of Shares being
transferred, and (c) to deliver same, together with the certificate or
certificates evidencing the Shares to be transferred, to the Company against
the simultaneous delivery to you of the purchase price for the Shares being
purchased pursuant to the Agreement.


 


3.                                       Withdrawal.  The Holder
shall have the right to withdraw from this escrow any Shares as to which the
Purchase Option (as defined in the Agreement) has terminated or expired.


 


4.                                       Duties of Escrow Agent.


 


(a)          Your duties hereunder may be altered,
amended, modified or revoked only by a writing signed by all of the parties
hereto.


 


(b)         You shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed by you to be genuine and to have been signed or presented
by the proper party or parties.  You
shall not be personally liable for any act you may do or omit to do hereunder
as Escrow Agent or as attorney-in-fact of Holder while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.


 


(c)          You are hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person or Company, excepting only orders or process of courts of law, and
are hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court.  In case you obey
or comply with any such order, judgment or decree of any court, you shall not
be liable to any of the parties hereto or to any other person, firm or Company
by reason of such compliance, notwithstanding any such order, judgment or
decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.


 


(d)         You shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver the Agreement or any documents
or papers deposited or called for hereunder.


 


(e)          You shall be entitled to employ such
legal counsel and other experts as you may deem necessary properly to advise
you in connection with your obligations hereunder and may rely upon the advice
of such counsel.


 


(f)            Your rights and responsibilities as
Escrow Agent hereunder shall terminate if (i) you cease to be Secretary of
the Company or (ii) you resign by written notice to each party.  In the event of a termination under
clause (i), your successor as Secretary shall become Escrow Agent
hereunder; in the event of a termination under clause (ii), the Company
shall appoint a successor Escrow Agent hereunder.


 


(g)         If you reasonably require other or
further instruments in connection with these Joint Escrow Instructions or
obligations in respect hereto, the necessary parties hereto shall join in
furnishing such instruments.


 


ATTACHMENT III


 

















 


(h)         It is understood and agreed that should
any dispute arise with respect to the delivery and/or ownership or right of
possession of the securities held by you hereunder, you are authorized and
directed to retain in your possession without liability to anyone all or any
part of said securities until such dispute shall have been settled either by
mutual written agreement of the parties concerned or by a final order, decree
or judgment of a court of competent jurisdiction after the time for appeal has expired
and no appeal has been perfected, but you shall be under no duty whatsoever to
institute or defend any such proceedings.


 


(i)             These Joint Escrow Instructions set forth
your sole duties with respect to any and all matters pertinent hereto and no
implied duties or obligations shall be read into these Joint Escrow
Instructions against you.


 


(j)             The Company shall indemnify you and hold
you harmless against any and all damages, losses, liabilities, costs, and
expenses, including attorneys’ fees and disbursements, for anything done or
omitted to be done by you as Escrow Agent in connection with this Agreement or
the performance of your duties hereunder, except such as shall result from your
gross negligence or willful misconduct.


 


5.                                       Notice.  Any notice
required or permitted hereunder shall be given in writing and shall be deemed
effectively given upon personal delivery or upon deposit in the United States
Post Office, by registered or certified mail with postage and fees prepaid,
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten days’
advance written notice to each of the other parties hereto.


 


	
  COMPANY:

  	
  Michael Higgins

  Ironwood Pharmaceuticals, Inc.

  320 Bent Street

  Cambridge, MA 02141

  
	
   

  	
   

  
	
  HOLDER:

  	
  Notices to Holder shall
  be sent to the address set forth below Holder’s signature below.

  
	
   

  	
   

  
	
  ESCROW AGENT:

  	
  Secretary

  Ironwood Pharmaceuticals, Inc.

  320 Bent Street

  Cambridge, MA 02141

  



 


6.                                       Miscellaneous.


 


(a)          By signing these Joint Escrow
Instructions, you become a party hereto only for the purpose of said Joint
Escrow Instructions, and you do not become a party to the Agreement.


 


(b)         This instrument shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.


 


ATTACHMENT III


 

















 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date Signed:

  	
   

  
				



 


	
  ESCROW AGENT:

  	
   

  
	
   

  	
   

  
	
  IRONWOOD
  PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title: Secretary

  	
   

  



 


ATTACHMENT III


 

















 


Exhibit B to
Stock Restriction Agreement


 


STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE


 


FOR VALUE RECEIVED, 
I,                                      ,
hereby sell, assign and transfer unto Ironwood Pharmaceuticals, Inc. (the “Company”)                                 (                  )
shares of the Series B Common Stock, $0.001 par value per share, of the
Company standing in my name on the books of said Company represented by
Certificate(s) Number
                    
herewith, and do hereby irrevocably constitute and appoint the Company’s
Secretary as transfer agent to transfer the said stock on the books of the
Company with full power of substitution in the premises.


 


	
   

  	
  Dated:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  



 


IN PRESENCE OF


 


 


	
   

  	
   

  	
   

  



 


 


NOTICE:
The signature(s) to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration, enlargement, or any change whatever and must be guaranteed by a
commercial bank, trust company or member firm of the Boston, New York or
Midwest Stock Exchange.